The noncooperative games discussed in Chap. 2 fail to reflect all the facets of optimal behavior in n-person market games. In particular, equilibria in noncooperative games do not take into consideration Pareto efficiency or group optimality. Chapter 3 considers cooperation in economic optimization and it is shown that group optimality and individual rationality are two essential properties for cooperation. However, merely satisfying group optimality and individual rationality does not necessarily bring about a dynamically stable solution in economic cooperation because there is no guarantee that the agreed-upon optimality principle is fulfilled throughout the cooperative period. In this chapter we consider dynamically stable economic optimization.

Original languageEnglish
Title of host publicationStatic and Dynamic Game Theory
Subtitle of host publicationFoundations and Applications
PublisherBirkhäuser Verlag AG
Pages77-110
Number of pages34
Edition9780817682613
ISBN (Print)978-0-8176-8261-3
DOIs
StatePublished - 1 Jan 2012

Publication series

NameStatic and Dynamic Game Theory: Foundations and Applications
Number9780817682613
ISSN (Print)2363-8516
ISSN (Electronic)2363-8524

    Research areas

  • Cooperative game, Cooperative strategy, Differential game, Optimality principle, Time consistency

    Scopus subject areas

  • Statistics, Probability and Uncertainty
  • Statistics and Probability
  • Applied Mathematics

ID: 36952896